Pandor said the new company would be funded by a capital investment of R1 billion by various state institutions, including the Industrial Development Corporation; more than R500 million from Lonza; and R100 million from Pelchem, a subsidiary of Necsa (Ltd), the Nuclear Energy Corporation of SA. Total investment for the project was R1.6 billion.

“Our partnership with Lonza is based on the fact that Lonza is one of the world’s leading suppliers of various products of pharmaceutical, healthcare and life sciences industries and is a global leader in the production and support of APIs in cell-based research, endotoxin detection, and cell therapy manufacturing.

“Lonza’s high standards plus their superb track record of establishing and maintaining successful commercial operations in developing countries, make them a valuable and desirable partner,” Pandor said.

South Africa currently imports the APIs needed to manufacture antiretrovirals.

Ketlaphela, once it starts up in 2016, is expected to significantly improve the security of supply of priority drugs, as well as stabilise the price of these.

While most antiretrovirals used in South Africa are locally manufactured, by four companies, all the APIs used in them are imported.

The Ketlaphela project is expected to create an estimated 2600 jobs.

Pandor said the construction process — which itself will create 3800 jobs — would start early next year.

The government had created an interdepartmental task team “to negotiate the modalities and incentives necessary to ensure the financial viability of the Ketlaphela project”, she said.

Trade and Industry Minister Rob Davies said South Africa consumed R25 billion worth of medicines each year, the “majority” of this imported.

On the partnership with Lonza, he said an important aspect was that South Africa would also be producing the chemicals used to make the APIs.

“It’s a rather significant step up in our capacity as pharmaceutical manufacturers,” he said.

Pandor indicated the saving South Africa might be expected to make through manufacturing its own APIs would be significant.

“We anticipate we’ll have about 40 percent localisation through the initiative,” she said.

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